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FASAB Revises Proposed Standard for Oil and Gas Resources

The
Federal Accounting Standards Advisory Board (FASAB) is seeking
comment on a Revised Exposure Draft, Accounting
for Federal Oil and Gas Resources. The proposed standard would result in
recognition of the estimated value of royalties from federal oil
and gas leases and changes over time in those values as well as
the amount of royalties designated for distribution to nonfederal
entities such as state governments.

If
the proposal is adopted, federal financial reports would also
provide information about revenues and depletion expense
attributable to production during the reporting period, related
trend information, estimated quantities of federal oil and gas
resources, and the estimated value of royalty relief on production
during the period.

The
proposed standards in the revised exposure draft are similar in
concept to the original exposure draft issued on May 21, 2007, but
substantive changes to the valuation and disclosure requirements
require re-exposure.

“I
believe the end result of this exposure draft, if implemented, would
be a more cost-effective standard that is sensitive to the lack of
resources available to implement accounting standards,” FASAB
Chairman Tom Allen said in a press release.

The
FASAB press release accompanying the proposal notes that extensive
federal oil and gas resources exist on public lands throughout the
country and on the Outer Continental Shelf. Currently, there are no
specific accounting standards for federal oil and gas resources, and
there is no federal financial reporting about the quantity or value
of these assets. In addition, royalty revenues are recognized, but
expenses are not recognized for the asset exchanged to produce those
revenues.

Written
comments are due Sept. 8. FASAB encourages respondents to provide
reasons for their positions. Specific
questions for respondents are
available at the FASAB Web site.